Evan McKenzie on the rise of private urban governance and the law of homeowner and condominium associations. Visit evanmckenzie.wikispaces.com for my published articles and services.

Saturday, July 05, 2003

Twin Rivers Complaint On Line Courtesy of AHRCThe American Homeowners Resource Center has posted on its web site the complaint in the case of Committee for a Better Twin Rivers v. Twin Rivers Homeowners' Associationhere.The major dispute in this case is whether the actions of homeowner associations are subject to the requirements of the New Jersey state constitution. It is, in other words, the main case in the nation on whether some HOAs should be viewed as quasi-governments for some purposes. This case is filed in Mercer County, New Jersey, and is now at the stage where cross-motions for summary judgment have been filed, and the judge will rule on them perhaps as early as this summer.
I am the expert witness on liability for the plaintiff, Committee for a Better Twin Rivers. The lead plaintiff counsel is Frank Askin, of the Rutgers Law School Constitutional Litigation Clinic, who is one of the nation's leading civil liberties attorneys. His summary judgment brief is a masterpiece. Also representing the plaintiffs is Steven Siegel, who wrote the best law review articles I've ever seen on this issue ("The Constitution and Private Government," 6 William and Mary Bill of Rights Journal 461, published in 1998).
I will keep you up to date on this case as events unfold. This is the one to watch.
Thanks to the folks at American Homeowners Research Center for posting the complaint.

Thursday, July 03, 2003

ABC 20/20 to Broadcast Flagpole Saga Friday, 7/4From Barbara Walters:
"My partner, John Stossel, has a red, white and blue holiday story
about a flagpole and a Vietnam veteran. The former soldier ran
afoul of a homeowner's association rule, wound up in court, lost his
flagpole -- and got stuck with legal fees of $150,000. To that,
John says, "Give Me a Break!" Please be sure to watch 20/20
on Friday at 10 p.m. (9 o'clock Central),
and also be sure to let us know what you think. My address
is BarbaraWalters@abcnews.com"
(Thanks to Fred Pilot for passing on the message from Babs.)

Wednesday, July 02, 2003

I have received some thoughtful responses to my post on the HOA activist movement.
I think conventional political activity--organization, marshalling information, using the media, lobbying, finding allies in the short and long term, lawsuits, etc.--are the way to go. I think a number of state legislators are starting to catch on to these issues, and see the potential for abuse as never before. Many in the media are starting to listen. But some others, not satisfied with all the signs of progress, seem to think the proper course is to vilify people and organizations on the internet, scream about "conspiracy," and claim with a straight face that their lives in a CID are just as bad as life in Stalinist Russia or Nazi Germany. I am concerned that the HOA activists who do such things could lose all credibility with the media and policy makers. That would be a very unfortunate thing, because these groups are critical to the prospects for reform. They need to be perceived as credible. This dilemma confronts all social movements. To get attention, they need to say and do unconventional things, but to get anything changed, they need to be credible. It isn't easy bringing about change from the outside. I hope that people can keep this in mind.
Thanks for your posts, everybody. I won't quote anybody by name without your approval, by the way.

Here's a contribution from Fred Pilot, including an article and his commentary on it, for your consideration. He's pondering the impact of the California budget crisis (something we see in smaller scale in other states as well) on the future of residential private government. One possible response to fiscal crisis is more privatization. Another response would be to strengthen the financial position of local governments. Here's Fred's take on the article that follows, and he highlighted in bold the text that I have also bolded for your convenience:

Fred says: "This proposal, being floated in hopes of getting both Republican and Democratic support for passage of an overdue state budget, would provide local governments greater property tax revenue from housing and thus reduce their need to privatize residential development as common interest developments governed by private homeowners associations."

State extends its hiring freezeThe move, paired with a purge of vacant jobs, may save $550 million.By Alexa H. Bluth and John Hill -- Bee Staff Writers - (Published July 2, 2003)
As California's fiscal year began without a budget Tuesday, Gov. Gray Davis issued dual orders aimed at trimming costs from the state's work force.

Davis also predicted a quick end to the legislative budget standoff as the outlines took shape of a possible deal to finance a chunk of the state's deficit without raising taxes.

"While everyone else prophesies doom and gloom ... I continue to believe that we will see action by the end of this week," Davis said after signing the pair of executive orders.

One would chop $250 million from the budget by eliminating 20,000 vacant government jobs.

The second would extend for at least two years a hiring freeze first imposed by Davis in October 2001 when the state's fiscal slide was becoming apparent. The governor said the savings would amount to about $300 million.

The hiring freeze does not apply to public health, safety and security personnel, including those hired by the California Highway Patrol, the Office of Emergency Services, the Military Department, and some Department of Health Services offices, according to Davis' order.

Davis urged the Legislature and the judicial branch to join the halt in hiring.

The move is designed to reduce California's payroll costs, but Davis administration officials also are attempting to persuade state workers' unions to agree to salary or benefit reductions, or face layoffs to achieve $855 million in payroll cuts.

In the absence of a spending plan and a deal with workers' unions, the Personnel Department has issued 9,000 notices warning state employees they may lose their jobs. But Davis said Tuesday's move might spare some from losing their posts.

Legislators failed to pass a budget by the midnight deadline Monday. State Controller Steve Westly has warned that state cash will soon dry up and he will begin halting payments to state vendors, community colleges and schools.

Lawmakers have for weeks been frozen in disagreement over raising taxes to help fill a budget deficit expected to reach $38 billion by the end of this fiscal year. Democrats have put forth several plans that contain program cuts, borrowing, and sales tax and other tax increases. Republicans have called for deeper cuts and rejected tax hikes of any kind.

Legislative leaders, however, talked informally Tuesday about a possible compromise that includes financing $10.7 billion of the state's deficit over several years using complicated maneuvers that avoid a tax increase.

"The key sticking point upstairs is how in fact we are going to sell current-year deficit bonds," Davis said. "One reason for my optimism is that I do see the sides narrowing on that issue."

The complex deal would work something like this, several sources said Tuesday: The Legislature would repeal a half-cent or a quarter-cent of the sales tax now dedicated to local government, replacing it with a sales tax increase of the same amount for the state. Consumers would pay the same tax on purchases, but part of the revenue that used to go to local coffers would instead go to the state treasury.

To compensate local governments for lost revenue, the state would give them the same amount in property tax. In effect, that would reverse the change that occurred in 1992, when the state shifted property taxes from local governments to schools to reduce its own costs during the last fiscal crisis.

Tuesday, July 01, 2003

I am increasingly convinced that the trend toward privatization of local
government will continue and even accelerate for the forseeable future. Problems that people keep pointing out with homeowner association private government will continue to receive increased media attention. This will lead to increased regulation by state governments in California, Texas, Arizona, Virginia, Maryland, New Jersey, Illinois, and other places where over half the new housing in major metro areas is in HOAs. There will also be more fiscal problems in under-reserved associations.

But those who advocate doing away with CID housing, or who think somehow the whole phenomenon will just go away, are wrong, I think. The mortage banking industry is quite happy with CID housing; municipalities and counties will continue to favor it due to fiscal
constraints that are only getting more acute; builders will continue to profit
from it; and most people will continue to buy it. The bottom line is simple:
there's no alternative yet that satisfies all these incentive structures as
well as CIDS. So the only responsible course of action is to find a way to
make it work, unless and until something better comes along--something that is
supported by the mortgage bankers, cities, builders, and consumers.

Right now the Community Associations Institute and other influential groups are trying to fix some of the problems with existing association governance. Whatever CAI does won't satisfy the HOA activist groups, of course, and it shouldn't. The condo
commandos have the potential to be a force for positive reform and they need to have their own agenda and advocate on behalf of the CID homeowner.

But I am increasingly concerned that some of these folks are teetering on the edge of being permanently dismissed by the press as neighborhood kooks and chronic malcontents. When you read the posts on the various newsgroups of HOA advocates, you find people railing against CAI, the Urban Land Institute, lawyers in general (well, I guess that isn't so unusual), politicians, the media, and everybody else with any professional credentials.

Personally, I am just sick and tired of hearing this sort of thing. It's a shame that they can't see what harm they are doing to their own cause, because it is a valid cause. But reading some of their posts reminds me of the one and only SDS meeting I ever attended back in 1968. I heard people screaming about how everything is bad, everybody is corrupt, the whole system has to be scrapped. I left the room just shaking my head in wonderment at the pure recklessness of the entire group. I was against the war in Viet Nam then, but I certainly didn't want to trash the entire country and vilify all it's institutions. But with SDS there was no middle ground. That mindset is very dangerous.

Now, in the debate over CID housing, we are talking about a couple of trillion dollars in home equity representing most families' only significant investment, and more trillions in mortgages. I have no problem with strong criticism--I've done plenty of it myself. But criticism needs to stay within certain bounds or it becomes nihilistic. Criticism should be aimed at making things better, not tearing them down and hoping that whatever arises from the ashes is better than what went before. Critics need to give some serious thought to the stakes ordinary people have in the status quo, and what the alternatives are.
People who want to smash the status quo without much thought to the consequences should read Edmund Burke's "Reflections on the Revolution in France". It was written in 1790, and it is still true today.

About Me

I am a professor of political science at the University of Illinois at Chicago, and an adjunct professor at The John Marshall Law School in Chicago. Nothing contained in this blog represents the opinions of UIC or John Marshall, and nothing you see here is legal advice. You can reach me at ecmlaw@gmail.com